Nordstrom Investors Run From Q3 Earnings Beat: 'These Retailers Are So Unpredictable'

It has been a mixed bag so far for third-quarter retail earnings season, with some big beats and some big misses. The investor reaction to both the good and bad reports has been inconsistent as well, and that theme carries on Wednesday with Nordstrom Inc JWN, which is the PreMarket Prep Stock of the Day.

Nordstrom's Pre-Earnings Rally: In sympathy with some other decent retail earnings reports over the last week, Nordstrom staged a significant rally.

One week ago, the issue posted an intraday low of $19.31 and rebounded to end the session at $19.93. On Tuesday, the issue reached its highest level for the rebound ($22.87) and the highest closing price as well. On a close-to-close basis, that amounts to a gain of $2.72 or nearly 14%.

Nordstrom's Q3 Report: After the close on Tuesday, the company reported third-quarter adjusted earnings of 20 cents per share, which beat average analyst estimates of 14 cents per share.

The company's earnings results excluded a supply chain technology and related asset impairment charge. The retailer posted third-quarter revenue of $3.5 billion, which beat average analyst estimates of $3.48 billion.

The company's topline results were down 2.9% on a year-over-year basis. Finally, the company noted slowdown in sales in parts of the country experiencing warmer than usual fall weather.

The beat failed to elicit much positive reaction from four analysts covering the company.

Related Link: 4 Nordstrom Analysts React To Q3 Earnings As Retail Stock Continues Its Descent

PreMarket Prep's Take: When the issue was being covered on the show Wednesday, it was already deep in the red by nearly $2 and had already established its after-hours/premarket low of $20.30.

“These retailers are so unpredictable and all over the place,” said co-host Dennis Dick.

“One thing I can say is that Nordstrom’s price-to-earnings ratio is lower and it is not an expensive stock. This is the type of company that investors have been 'buying the dip' on.”

Dick concluded he would be interested in the area closer to the $20 level.

The author of this article alerted investors that buyers were patiently coming in at the $20.50 area, but there was no daily low there to further confirm support. In the event of a rally, the issue needed to reach $21.82 to fill the void in price action from Tuesday’s session.

JWN Price Action: After a much lower opening ($20.60 vs. $22.65), the issue immediately bottomed at $20.40 and reversed course. As of 2 p.m. it had rallied into the lower $22 handle.

Nordstrom ultimately lost 4.24% Wednesday, closing at $21.69.

The discussion on Nordstrom from Wednesday’s show can be found here:

Photo via Shutterstock.